Basic Metals and Mining SBU Transnet Supplier Conference 15 th October 2015 Thabiso Sekano DRAFT
The Goal of IDC’s Metals value chain is to assist in developing a competitive and diversified local metal products industry that effectively utilizes capacity to produce a significant portion of metal products consumed in SA, in addition to developing strong export markets The Mining and Basic Metals unit is one of three business units that make up the Basic Metals value channel. The unit is headed by Mazwi Tunyazwi and comprises 14 dealmakers made up of Engineers, Metallurgists, Chartered Accountants, and Geologists DRAFT
Our Strengths DRAFT
Business Unit Strengths • Balanced mix of experience in deal making and project management • In-house skills in project initiation and development • Ability to partner and co-invest with both local and international investors • Ability to co-fund with other lenders (both local and international) • Wealth of experience and institutional knowledge of the RSA mining and metals industry 4 4
Our Goals • Identify and finance areas of process improvements and projects within production facilities necessary to improve yield and align efficiency with global standards • Finance related foundry construction / capacity expansion • Co-finance studies with private sector that identify and plan exploitation of cheaper inputs, • Invest to build new / upgrade facilities aimed at localizing production of high demand products • Finance technological improvements within sector aimed at increasing production of higher grade steel 5 5
2015/16 Strategies DRAFT
Sector Strategy Overview Ensure globally/domestically competitive downstream of: Automotive, machinery Value Chain Goal* &equipment, fabricated metals Industry A globally competitive and diversified local basic metal and mineral resource industry that effectively utilizes capacity Development Goal* to produce a significant portion of metals products and minerals consumed in RSA and RoA , in addition to developing increased export of value added minerals Opportunity Increase Increase local Increase steel Increase Local Development of Development of Production of production of scrap recycling production of Large mines strategic non ferrous Iron, Steel and capacity and ferroalloys Leader:Kevin mineral and metals related inputs milling capacity Leader:Washingt Hodges beneficiation Leader: Nina Leader:Christian Leader:Inderasen on Musara Leader:Kevin Yose Carstens Naidoo Hodges Opportunity Aluminium Masorini Iron Scrap recycling Manganese Precious Metals Production of • • • • • • sub-sector Rod and Steel Mini Mills Mining and Natural Gas Phosphate and • production production Foundry beneficiation mining Potash • Copper Rod Coking coal Modernisation Ferrochrome Bulk Coal Mining • • • • • Production mining in Improve Scaw’s mining and Commodities Industrial • • Automotive RSA/SADC competitivenes beneficiation New Industry’s minerals • • body panel Production of s Ferro-nickel minerals Uranium • • • aluminium thin gauge mining and production stainless steel beneficiation Intended Security of raw Lower input costs Lower input costs Increase the Increase exports, Increase supply to impact on the material of steel and to up stream supply of create sustainable the upstream industry supply/lower increase industry and downstream employment and industry, energy input costs to competition/ improve ferro- reduce RSA deficit security and the up stream competitiveness competitiveness of manganese, import industries of up stream foundry industry ferro-chrome, replacement and industries and ferro-nickel ore exports increase exports and exports 7 7
Sector Strategy Overview – Metals Value Chain Basic metals Value chain Ensure globally/domestically competitive downstream manufacturing of: Automotive, machinery & goal equipment, fabricated metals Industry A competitive local steel and metal industry that produces basic metals at prices and quality development that stimulate growth of downstream industries goal Proactive Opportunities Opportunity Steel and related inputs/Fabricated Scrap and scrap Foundries (brake products – flat and long steel replacements, e.g. pig drums, pumps) and mini iron, billets mills Intended impact on the Production of basic metals at prices and Reduction of major input Improving the quality and industry quality at competitive prices cost EAF operators, and competiveness of suppliers mini mills to downstream industries Contribution to industry Reduce prices of relevant products to Reduce prices of relevant Reduce prices of relevant Goal downstream industries products to downstream products to downstream industries industries Size of funding Steel related projects: R7.86bn Scrap replacement Mini-mills and foundries opportunities (2016-2026) projects: R840m modernisation: R2.52bn (R’m) Largest constraints Availability and cost of electricity, EIA Availability and cost of Availability and cost of approvals, Logistic costs electricity, scrap electricity, scrap availability availability Stakeholders Steel Fabricators, SEIFSA, Labour, Gvt, EDD, dti, SEIFSA, EAF Steel Fabricators merchants operators, Foundries Reactive areas of funding Opportunity Metal scrap process and standard long Smelted products e.g Ferroalloys, Hot-rolled products e.g re-bar, chains, ropes etc products Size of funding R1.7bn R3.38bn opportunities (2016-2026) (R’m) Size of funding opportunities refer to IDC’s funding 8
Sector Strategy Overview – Metals Value Chain Metal Products Value chain Ensure globally/domestically competitive downstream manufacturing of: Automotive, machinery & goal equipment, fabricated metals Industry A competitive local metal products industry that substitute imports and can increase exports development to SADC and RoA goal Proactive Opportunities Opportunity Steel and Scrap Beneficiation Structural and Packaging products(e.g tankers, pipes) Intended impact on the To develop niche capabilities to take To develop niche capabilities to take advantage industry advantage of growing demand for metal of growing demand for metal products in SA products in SA and RoA and RoA especially the Gas industry in East Africa Contribution to industry Increase scale and efficiency of SA metal Improve % of SA purchased metal products Goal waste and create value to stimulate growth of and to stimulate growth of downstream downstream industries industries Size of funding R9.26bn R3.1bn opportunities (2016-2026) (R’m) Largest constraints Availability and cost of electricity, EIA Logistics cost, Energy, lack of skills approvals, Logistic costs Stakeholders Steel Fabricators, SEIFSA, Labour, Gvt, merchants Reactive areas of funding Opportunity Jewellery, cut & bend operations Other fabricated metal products, consumer products, insulated wire and cables, engines and turbines Size of funding R1.9bn R3.4bn opportunities (2016-2026) (R’m) Size of funding opportunities refer to IDC’s funding 9
Sector Strategy Overview – Mining Metals Value Chain Mining Value chain Ensure globally/domestically competitive downstream manufacturing of: Automotive, machinery & goal equipment, fabricated metals Industry development A competitive sustainable modern, innovative and social responsible mining industry. goal Proactive Opportunities Opportunity Mining developments that have a life of mine in excess of 20 years (good grade with long life of mine) Intended impact on the Ensures sustainable development of the area around the mine supports primarily the ongoing industry development of the upstream manufacture of mining equipment and secondly the provision of services to the mine. Contribution to industry Goal Spur the development of spin-off sectors Size of funding opportunities R0.5bn billion early stage investment (feasibility studies), R6bn new mine development (2016- 2026) (R’m) projects. Largest constraints Mindset of mining shareholders and management, lack of coordinated planning, EIA approval, MRDA administration, water licences, Cost and availability of electricity, legislation to be in line with new mining model Stakeholders Department of Mineral Resources, communities, labour, traditional leaders, Department of human settlements, Chamber of mines, DMR, water and environmental affairs Reactive areas of funding Opportunity Expansions, industry consolidation initiatives Investments in the continent with direct benefit to and repatriation of mining assets SA Size of funding R1.2 bn R1.5bn opportunities (2016-2026) (R’m) 10
Thank You DRAFT
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